Governor Jindal’s Selling of Louisiana

Louisiana Governor Bobby Jindal is stepping forward with a plan to selling state assets such as state prisons, buildings, lottery and group benefits in order to meet a major budget hole of $1.6 billion. Last week at a LABI panel discussion, Secretary of Administration, Paul Rainwater, would not provide details regarding this plan but did give information about possible sale of State Group Benefits.

While very few of us want to destroy health care and education in Louisiana, some are complaining that the Governor is more willing to dodge than bite the budget bullet.

Unquestionably, the Governor’s past words will haunt him as he attempts to convince the weary public and the legislature that selling state properties is the way to achieve sound financial footing.

For example, last year, in an op-ed piece which the Louisiana Republican Party sent out by email, Jindal scolded his political opposition—as he has often done on the speech stump. Here are excerpts of his February 2010 editorial which parroted his many public appearances:

Alexandria Town Talk
Governor Bobby Jindal
February 25, 2010

“The news coming out of Washington, D.C. these days paints a clear picture of the ‘Washington Way’ to address our current national economic challenges.

While we hear folks in D.C. talk about ‘jobs, jobs, jobs,’ all we see them do is ‘spend, spend, spend.’ Washington has shown us that the ‘Washington Way’ to deal with these national economic challenges is to spend more money, print more money, borrow more money, and raise taxes to get more money from Americans…

Here in Louisiana, we have taken the opposite approach of Washington, D.C. When revenue is down, we only have two choices: we can raise taxes on people or businesses to keep government spending the same, or we can tighten the belt on government and find savings. The most important thing I have to say on this point is that we absolutely will not raise taxes on our people or our businesses.

Instead, we have presented a FY 10-11 budget that forces government to live within its means. This is the Louisiana Way forward. We will not follow Washington’s lead and spend money we don’t have or borrow money we can’t pay back…

The budget includes reforms and efficiencies in every area of state government…

There will be those who do not want government to be smaller, those who do not want to reduce government spending or make the hard choices to live within our means…

Governor Jindal has often complained against using “one-time money” to plug budget holes which in essence is exactly what the sale of state assets would be.

Two lines he has used on the local and national stages are:

“Basing the budget on one-time monies to pay recurring spending is like paying your mortgage with your credit card”.

“Washington is spending like a bunch of drunken sailors”.

Also, during his response to Obama after the “State of the Union Address”, Governor Jindal said, “Who amongst us would ask our children for a loan so we could spend money we do not have on things we do -- we do not need? That is precisely what the Democrats in Congress just did. It's irresponsible. And it's no way to strengthen our economy, create jobs, or build a prosperous future for our children

This year, an election year, Jindal once again is hitting the speech circuit, promising not to raise taxes.

Certainly, Louisiana, unlike Washington, cannot print more money. Instead, Jindal plans to “cut and sell” to achieve short-term budget equilibrium. This year, with the federal stimulus running dry, the Governor is toying with selling state properties instead of spending assets distributed by the federal government--per the federal “stimulus”.

As we approach the legislative session, the Governor has few choices and none of them are good.

He faces the same problem as parents educating their kids on a limited budget. He often contends that families cut rather than fund their long-term obligations through credit card spending. Now, however, Jindal appears to prefer selling state assets, in essence, to fund our kids’ schooling and to cover our other annual expenses.

So, instead of paying the mortgage on a credit card he prefers selling the (state’s) family’s assets to meet our reoccurring wants and needs—a decision which appears to be promoting the same sins of which the Governor has often complained.

No doubt, Jindal will be viewed as “back-stepping” especially given his prior very public slams against the democrats and the feds.

The truth is, reality is now striking home as the governor carves a long winding path down the “Louisiana Way”.

Is the Governor's plan a good idea? Will it work? Is the plan unique? Are there legal and legislative challenges? Those are the questions discussed in a recent Bayoubuzz interview with LSU economist Jim Richardson. Richardson serves on the Revenue Estimating Conference which recently has projected a 1.6 budget deficit for the upcoming budget.